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2020 (9) TMI 345 - AT - Income TaxTP Adjustment - protective adjustment on account of business restructuring - HELD THAT - We find that TPO/DRP have made adjustment on substantive basis in assessment year 2010-11. However, since the proceedings in assessment year 2010-11 were subjudice, protective adjustment was made in the impugned assessment order making an addition which is in line with similar addition for assessment year 2011-12, 2012-13 and 2014-15. We find the MAP resolution was passed on 29th January, 2018 which is much after the order passed by the AO/TPO/DRP. Under these circumstances we deem it appropriate to restore the issue to the file of the AO/TPO for deciding the issue afresh in the light of the MAP resolution dated 29th January, 2018 and the order passed by the DRP in assessee s own case for assessment year 2014-15 AO/TPO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds raised by the assessee are accordingly allowed for statistical purposes.
Issues:
Protective adjustment on account of business restructuring for assessment year 2013-14. Analysis: The appeal was against the order passed under section 143(3) r.w.s 144C of the Income Tax Act 1961 for the assessment year 2013-14. The grounds raised by the assessee challenged the adjustments proposed by the Transfer Pricing Officer (TPO) and confirmed by the Dispute Resolution Panel (DRP). The key issues raised included the existence of an international transaction requiring determination of arm's length price (ALP), the basis for protective adjustments, consistency in approach, method for redetermination of ALP, rejection of economic analysis, and errors in computation. The TPO proposed an upward adjustment to the total income of the assessee, leading to a protective adjustment of INR 100,69,37,657. The DRP upheld this action, citing the substantive adjustment made in the previous assessment year. The final assessment order added the adjustment on a protective basis. The assessee contended that the protective adjustment was made due to business restructuring in the earlier assessment year, and similar adjustments were made for subsequent years. The assessee relied on Mutual Agreement Procedure (MAP) resolutions for previous assessment years to support the withdrawal of protective adjustments. The DR suggested restoring the matter to the AO/TPO for fresh determination in light of the MAP resolution. The Tribunal considered the arguments, orders of the authorities, and the MAP resolution. The main issue focused on the protective adjustment related to business restructuring. The Tribunal noted that the MAP resolution came after the orders by the authorities and decided to restore the matter to the AO/TPO for reevaluation based on the MAP resolution and previous DRP orders. The Tribunal directed the AO/TPO to reexamine the issue in accordance with the law and facts, providing the assessee with a fair hearing. Consequently, the grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed accordingly. In conclusion, the Tribunal's decision centered on the protective adjustment concerning business restructuring for the assessment year 2013-14. The Tribunal acknowledged the MAP resolution and previous DRP orders, leading to the restoration of the matter to the AO/TPO for a fresh determination. The Tribunal emphasized the need for a fair evaluation based on the MAP resolution and directed the authorities to decide the issue accordingly.
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